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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
YOUNG BROADCASTING INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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Notes:
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YOUNG BROADCASTING INC.
____________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 4, 1999
____________________
The Annual Meeting of Stockholders of Young Broadcasting Inc. (the
"Company") will be held at the offices of WKRN-TV, 441 Murfreesboro Road,
Nashville, Tennessee at 10:00 a.m. on Tuesday, May 4, 1999, for the following
purposes:
1. To elect nine directors of the Company to serve for a term of one year.
2. To ratify and approve the selection of independent auditors of the
Company to serve until the next annual meeting of stockholders.
3. To approve an amendment to Young Broadcasting Inc.'s 1995 Stock Option
Plan to increase the total number of shares with respect to which
options and stock appreciation rights may be granted thereunder.
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only holders of record of shares of the Company's Class A Common Stock and
Class B Common Stock at the close of business on April 2, 1999 are entitled to
notice of, and to vote at, the meeting and any adjournment thereof.
By Order of the Board of Directors,
/s/ James A. Morgan
JAMES A. MORGAN
Secretary
April 7, 1999
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All persons to whom the accompanying proxy is addressed are requested to date,
execute and return it promptly in the enclosed, self-addressed envelope. No
postage is required if mailed within the United States.
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<PAGE>
YOUNG BROADCASTING INC.
____________________
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
To Be Held
May 4, 1999
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of Young Broadcasting Inc. (the "Company") of proxies and
voting instructions in the accompanying form for use at the Annual Meeting of
Stockholders to be held at the offices of WKRN-TV, 441 Murfreesboro Road,
Nashville, Tennessee at 10:00 a.m. on Tuesday, May 4, 1999, and at all
adjournments thereof. The shares represented by proxies solicited by the Board
of Directors of the Company will be voted in accordance with the directions
given therein. If no direction is indicated, the proxy will be voted in favor
of the proposals set forth in the notice attached to this proxy statement. Any
stockholder may revoke his proxy at any time prior to the voting thereof by
giving notice in writing to the Secretary of the Company, by granting a proxy
bearing a later date or by voting in person at the meeting.
Holders of record of shares of the Company's Class A Common Stock, $.001
par value ("Class A Common Stock"), and Class B Common Stock, $.001 par value
("Class B Common Stock"), at the close of business on April 2, 1999 are entitled
to vote at the meeting. As of such record date, there were 11,431,557 shares of
Class A Common Stock and 2,382,447 shares of Class B Common Stock outstanding.
The presence, in person or by proxy, of stockholders entitled to cast at
least a majority of the votes entitled to be cast by all stockholders will
constitute a quorum for the transaction of business at the meeting. Holders of
shares of Class A Common Stock and Class B Common Stock will vote as a single
class on all matters submitted to a vote of the stockholders. Each share of
Class A Common Stock will be entitled to one vote and each share of Class B
Common Stock will be entitled to ten votes.
Directors will be elected by a plurality of the votes cast at the
meeting. Approval of each other matter will require the affirmative vote of a
majority of the votes cast thereon. On all matters to come before the meeting,
abstentions and non-votes will not be considered as votes cast, and will be
considered only for purposes of determining whether a quorum is present at the
meeting. Adam Young and Vincent Young together beneficially possess
approximately 55% of the aggregate votes that may be cast at the meeting. See
"Security Ownership of Certain Beneficial Owners and Management." Accordingly,
the affirmative vote of Adam Young and Vincent Young alone is sufficient to
adopt each of the proposals to be submitted to the stockholders at the meeting.
Adam Young and Vincent Young have advised the Company that they will vote all of
their shares in favor of the proposals set forth in the notice attached to this
proxy statement.
The cost of soliciting these proxies will be borne by the Company.
Proxies may be solicited by directors, officers or employees of the Company in
person or by telephone.
The principal executive offices of the Company are at 599 Lexington
Avenue, New York, New York 10022. This proxy statement and the form of proxy
are being mailed to stockholders on or about April 7, 1999.
ELECTION OF DIRECTORS
It is proposed to elect nine directors of the Company to hold office for
terms of one year and until their successors shall be elected and shall qualify.
At the meeting, the persons named in the enclosed form of proxy will vote the
shares covered thereby for the election of the nominees named below to the Board
of Directors of the Company unless instructed to the contrary. Each nominee is
currently a director of the Company.
<PAGE>
Director Principal occupation and business
Name of Nominee Age Since experience during the past five years
- --------------- --- -------- -------------------------------------
Vincent J. Young 51 1986 Chairman of the Company since its
inception in 1986, member of the
Compensation and Audit Committees of the
Company, and director and Chairman of
each of the Company's corporate
subsidiaries. Mr. Young has served from
1980 and continues to serve as Chairman
of Adam Young Inc., a national television
representation firm, which merged with
and into a subsidiary of the Company in
March 1998. Vincent Young is the son of
Adam Young.
Adam Young 85 1986 Treasurer of the Company since its
inception, and director and Treasurer of
each of the Company's corporate
subsidiaries. Mr. Young is also President
and Treasurer of Adam Young Inc., which
he founded in 1944.
Ronald J. Kwasnick 52 1994 President of the Company since its
inception, and President of each of the
Company's corporate subsidiaries other
than Adam Young Inc., for which he serves
as Executive Vice President.
James A. Morgan 50 1998 Executive Vice President of the Company
since March 1993, and Executive Vice
President of each of the Company's
corporate subsidiaries. From 1984 until
joining the Company, he was a director
and Senior Investment Officer at J.P.
Morgan Capital Corporation involved in
investing the firm's own capital in
various leveraged and early growth stage
companies.
Bernard F. Curry 80 1994 Chairman of the Audit Committee of the
Company. Mr. Curry served from 1982 as a
director and from December 1992 as the
Chairman of the Audit Committee of Morgan
Trust Company of Florida, N.A. until it
was merged into J.P. Morgan Florida, FSB
(now J.P. Morgan, FSB) in January 1994.
He has served the surviving bank, which
is an indirect wholly-owned subsidiary of
J.P. Morgan & Co. Incorporated, in the
same capacities since August 1991.
Alfred J. Hickey, Jr. 62 1994 Chairman of the Compensation and Stock
Option Committees of the Company. Mr.
Hickey is currently a private investor.
He was Vice-President--Institutional
Sales of Legg Mason, a brokerage firm,
from May 1990 to May 1991. Mr. Hickey was
a private investor from May 1991 to June
1993, when he became the Vice President--
International Sales of Southeast Research
Partners, a brokerage firm, in which
capacity he served until October 1994.
2
<PAGE>
David C. Lee 33 1998 Member of the Compensation and Stock
Option Committees of the Company. Mr. Lee
has been a managing director of Sandler
Capital Management, a private investment
and money management firm specializing in
media, communications, and technology
since January 1999. Prior thereto, he was
a Managing Director of Lazard Freres &
Co. LLC, leading investment banking firm
where he served in various capacities
from March 1988 to October 1994 and from
April 1996 to December 1998. From
November 1994 to March 1996, Mr. Lee was
a Managing Director of Toronto Dominion
Bank, U.S.A. Division, where he headed
the mergers and acquisitions group.
Leif Lomo 69 1994 Member of the Compensation and Stock
Option Committees of the Company. From
1987 to 1994, Mr. Lomo served as Chairman
of A.B. Chance Industries, Inc., a
manufacturer of electricity-related
equipment. Prior to its acquisition by
Hubbell Incorporated in April 1994, Mr.
Lomo also acted as President and Chief
Executive Officer of A.B. Chance. From
January 1995 to June 1996, Mr. Lomo
served as the President of Marley Pump, a
division of United Dominion Company,
which is principally engaged in the
manufacture and marketing of submersible
pumps for small water well applications
and the distribution of gasoline. Mr.
Lomo is currently a private investor.
Robert L. Winikoff 52 1998 Member of the Audit Committee of the
Company. Partner of the New York City law
firm of Cooperman Levitt Winikoff Lester
& Newman, P.C. for more than the past
five years, which has served as the
Company's general outside counsel since
1987.
The Board of Directors of the Company has an Audit Committee, a Compensation
Committee and a Stock Option Committee. The Board of Directors has no
nominating committee; nominees for election as directors of the Company are
selected by the Board of Directors. During 1998, there were three meetings of
the Audit Committee, three meetings of the Compensation Committee and four
meetings of the Stock Option Committee. All of the respective Committee members
attended each of the Committee meetings.
The Audit Committee consists of three directors, two of whom are required by
the Company's By-Laws to be independent directors. The current members of the
Audit Committee are Bernard Curry, Robert Winikoff and Vincent Young. Its
functions are to (i) recommend the appointment of independent accountants, (ii)
review the arrangements for and scope of the audit by independent accountants,
(iii) review the independence of the independent accountants, (iv) consider the
adequacy of the system of internal accounting controls and review any proposed
corrective actions, (v) review and monitor the Company's policies regarding
business ethics and conflicts of interest, (vi) discuss with management and the
independent accountants the Company's draft annual financial statements and key
accounting and reporting matters, and (vii) review the activities and
recommendations of the Company's accounting department.
The Compensation Committee consists of four directors, two of whom are
required by the Company's By-Laws to be independent directors. The current
members of the Compensation Committee are Leif Lomo, Alfred Hickey, David Lee
and Vincent Young. The Compensation Committee has authority to review and make
recommendations to the Board of Directors with respect to the compensation of
executive officers of the Company. See "Executive Compensation_Report of the
Compensation Committee."
The Stock Option Committee consists of three directors, each of whom is a
"non-employee" director (as described hereinafter under "Approval of Amendment
to 1995 Stock Option Plan"). The current members of the Stock Option Committee
are Leif Lomo, Alfred Hickey and David Lee. The Stock Option Committee
administers the Young Broadcasting
3
<PAGE>
Inc. 1995 Stock Option Plan (the "Plan") and determines, among other things, the
time or times at which options will be granted, the recipients of grants,
whether a grant will consist of incentive stock options, nonqualified stock
options and stock appreciation rights (in tandem with an option or free-
standing) or a combination thereof, the option periods, whether an option is
exercisable for Class A Common Stock or Class B Common Stock, the limitations on
option exercise and the number of shares to be subject to such options, taking
into account the nature and value of services rendered and contributions made to
the success of the Company. The Stock Option Committee also has authority to
interpret the Plan and, subject to certain limitations, to amend provisions of
the Plan as it deems advisable. See "Approval of Amendment to 1995 Stock Option
Plan."
During 1998, the Board of Directors of the Company held ten meetings.
The Board of Directors recommends a vote FOR the election of the nominees
herein.
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 2, 1999
regarding the beneficial ownership of the Company's Common Stock by (i) each
executive officer and director of the Company, (ii) each stockholder known by
the Company to beneficially own 5% or more of such Common Stock and (iii) all
directors and executive officers as a group. Except as otherwise indicated, the
address of each beneficial holder of 5% or more of such Common Stock is the same
as the Company. The table includes shares issuable upon the exercise of
options, subject to stockholder approval of the proposal to amend the Plan. See
"Approval of Amendment to 1995 Stock Option Plan."
<TABLE>
<CAPTION>
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Class A Common Stock Class B Common Stock Percent of
------------------------------ --------------------------------- Vote as a
Beneficial Owner Number % Number % Single Class(1)
- ------------------------ ------------------------------ --------------------------------- -----------------
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Vincent J. Young 3,984(2)(3) * 1,324,643(4)(5)(6)(7) 47.5 33.7
- ------------------------------------------------------------------------------------------------------------------------------------
Adam Young -- -- 840,926(5)(7)(8) 35.2 23.8
- ------------------------------------------------------------------------------------------------------------------------------------
Ronald J. Kwasnick (3) -- 147,612(5)(9) 6.0 4.1
- ------------------------------------------------------------------------------------------------------------------------------------
James A. Morgan 300(3)(10) * 232,702(5)(6)(11) 9.1 6.6
- ------------------------------------------------------------------------------------------------------------------------------------
Deborah A. McDermott 800(3) * 56,350(5)(12) 2.3 1.6
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Baron Capital Group, Inc. 1,415,600 11.4 -- -- 4.5
and Affiliates (13)
767 Fifth Avenue
New York, NY 10153
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Leon G. Cooperman (14) 899,700 7.9 -- -- 2.5
88 Pine Street
Wall Street Plaza
New York, NY 10005
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The Equitable Companies 895,359 7.8 -- -- 2.5
Incorporated and
Affiliates (15)
1290 Avenue of the Americas
New York, NY 10104
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T. Rowe Price Associates, 659,700 5.8 -- -- 1.9
Inc.(16)
100 E. Pratt Street
Baltimore, MD 21202
- ------------------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman, LLC(17) 621,000 5.4 -- -- 1.8
605 Third Avenue
New York, NY 10158
- ------------------------------------------------------------------------------------------------------------------------------------
Wanger Asset Management, 570,000 5.0 -- -- 1.6
L.P.(18)
227 West Monroe Street
Chicago, IL 60606
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Bernard F. Curry (19) 10,700 * -- -- *
- ------------------------------------------------------------------------------------------------------------------------------------
Alfred J. Hickey, Jr. (19) 9,700 * -- -- *
- ------------------------------------------------------------------------------------------------------------------------------------
Leif Lomo(19) 10,700 * -- -- *
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Robert L. Winikoff (20)(21) 48,296 * -- -- *
- ------------------------------------------------------------------------------------------------------------------------------------
David C. Lee(21) 6,296 * -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
All directors and executive 90,776 * 2,602,233 84.7 61.9
officers as a group
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(footnotes begin on following page)
5
<PAGE>
- --------------------------------------
* Less than 1%.
(1) Holders of Class A Common Stock are entitled to one vote per share, and
holders of Class B Common Stock are entitled to ten votes per share
except for votes relating to certain significant transactions. Holders of
both classes of Common Stock will vote together as a single class on all
matters presented for a vote, except as otherwise required by law.
(2) Includes 2,812 shares held by his wife.
(3) Does not include shares held through the 401(k) Plan. The 401(k) Plan
offers matching contributions on a quarterly basis in the form of Class A
Common Stock.
(4) Includes 87,572 shares held pursuant to an agreement dated as of July 1,
1991 which established a voting trust for the benefit of family members
of management, for which Vincent Young and Richard Young act as trustees.
During the term of the voting trust, which expires July 1, 2001, the
trustees have the sole right to vote the shares subject to the trust. If
the trustees cannot agree as to how the shares shall be voted, each
trustee will vote 50% of the shares. Also includes 405,357 shares
issuable upon the exercise of options granted pursuant to the Plan. Also
includes 10,050 shares held pursuant to an agreement dated as of October
1, 1996 which established a voting trust for the benefit of family
members of management, for which Vincent Young acts as trustee. During
the term of the voting trust, which expires October 1, 2006, the trustee
has the right to vote the shares subject to the trust.
(5) Does not include those shares issuable upon the exercise of options
granted pursuant to the Plan which are not exercisable within 60 days.
(6) Includes 1,900 shares held for the benefit of his minor children.
(7) The table does not include 400,000 shares held by Spray-V Limited
Partnership for which Vincent Young, his siblings Richard and Sharon
Young, and his mother Margaret Young, serve as directors and may be
deemed to beneficially own such shares pursuant to Rule 13d-3(a) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(8) Includes 142,063 shares held by his wife. Also includes 4,164 shares
issuable upon the exercise of options granted pursuant to the Plan.
(9) Includes 59,217 shares issuable upon the exercise of options granted
pursuant to the Plan.
(10) Includes 300 shares held by a family trust.
(11) Includes 178,032 shares issuable upon the exercise of options granted
pursuant to the Plan.
(12) Includes 41,795 shares issuable upon the exercise of options granted
pursuant to the Plan.
(13) Represents shares beneficially owned by BAMCO, Inc. (1,224,000) and Baron
Capital Management, Inc. (191,600), subsidiaries of Baron Capital Group,
Inc. ("BCG"), including 1,077,000 shares held by Baron Asset Fund, an
investment advisory client of BAMCO, Inc., as reported in a Schedule 13G
filed in November 1997. Such report also includes an individual reporting
person who controls BCG. All of such persons disclaim beneficial
ownership of such shares pursuant to Rule 13d-4 under the Exchange Act.
(14) Represents shares beneficially owned by Leon G. Cooperman as reported in
a Schedule 13G filed in February 1999.
(15) Represents shares beneficially owned by Alliance Capital Management L.P.,
a subsidiary of The Equitable Companies Incorporated , as well as by
certain parent holding companies, as reported in a Schedule 13G filed in
February 1999.
(16) Represents shares beneficially owned by T. Rowe Price Associates, Inc.,
on behalf of its clients, as reported in a Schedule 13G filed in February
1999.
(17) Represents shares beneficially owned by Neuberger & Berman, LLC, as
reported in a Schedule 13G filed in February 1999. Includes 65,400 shares
owned by principals of Neuberger & Berman, LLC, as to which Neuberger &
Berman, LLC disclaims beneficial ownership.
(18) Represents shares beneficially owned by Wanger Asset Management, L.P., on
behalf of its clients, and Wanger Asset Management, Ltd., as reported in
a Schedule 13G filed in January 1999.
(19) Includes 9,700 shares issuable upon the exercise of stock options, 8,700
of which were granted pursuant to the Plan.
(20) Includes 22,000 shares held by a limited liability company for which he
serves as manager.
(21) Includes 5,296 shares issuable upon exercise of options granted
pursuant to the Plan.
6
<PAGE>
EXECUTIVE COMPENSATION
Report of the Compensation Committee
The Company's Compensation Committee (the "Committee"), which is composed of
three independent directors (Alfred Hickey, Leif Lomo and David Lee) and one
inside director (Vincent Young), is responsible for reporting to the Board
concerning the compensation policies followed by the Committee in recommending
to the Board compensation for executive officers.
The Committee utilizes a program designed to attract, motivate and retain
highly skilled and effective executives who can achieve long-term success in an
increasingly competitive business environment and whose services the Company
needs to maximize its return to stockholders. The program is premised on the
belief that an executive's compensation should reflect his individual
performance and the overall performance of the Company, with an appropriate
balance maintained among the weightings of these potentially disparate
performance levels. The program requires flexibility in order to ensure that
the Company can continue to attract and retain executives with unique and
special skills critical to the Company's success. Flexibility is also necessary
to permit adjustments in compensation in light of changes in business and
economic conditions. The compensation of each executive officer is reviewed
annually by the Committee.
In discharging its responsibilities with respect to its 1998 executive pay
program, the Committee utilized the recommendations made in 1997 by executive
compensation consultants. The consultants made a review and assessment of the
Company's executive pay program to determine whether it was market competitive,
internally equitable and provided the appropriate balance between fixed and
performance-variable pay to ensure that the program appropriately reflects the
risks and challenges facing the Company's executive team. The consultants
reviewed with the Committee survey data regarding compensation practices and
payments by comparable organizations and the relationships between measures of
company size and performance and corresponding executive pay levels. The
comparison group selected by the consultants was comprised of broadcasting
industry peer companies. Such comparative companies are not necessarily the
same companies included in the indices used in the performance graph that
follows, as the Company's competitors for executive talent are not limited to
such companies.
Based on the consultants' recommendations, the Committee determined to set
executive compensation levels at or above competitive median market levels to
provide compensation opportunities comparable to those paid by broadcast media
companies that compete for executives with comparable talents. Specifically,
total cash compensation opportunities (salary plus annual bonus) was targeted at
the 75th percentile of competitive market levels, as warranted by annual
performance. The consultants determined that total cash compensation levels for
executives were at or near median (i.e., 50th percentile) competitive rates and
significantly below competitive 75th percentile target levels.
The consultants recommended that the Committee manage executive compensation
within the framework of a total annual compensation structure to allow for
flexibility in the mix of pay elements and competitive levels while fixing
target pay at desired levels. Target total compensation levels, including
target annual and long-term incentive opportunities, were developed for each
executive position using a pay mix recommended by the consultants. To create a
more balanced overall pay structure, a pay mix was developed for each executive,
with the executive's year-end cash bonus and long-term incentive compensation
tied to a fixed percentage of base salary. The consultants recommended target
compensation levels based on the Company's compensation philosophy and
competitive pay positioning versus the broadcast media peer group. In February
1998, the Board, based upon the Committee's recommendations, established base
salary levels for Vincent Young and the other executive officers at the same
levels as 1997.
In February 1998, the Committee established a year-end cash bonus plan
providing for bonus awards to executive officers at the discretion of the Board
if the Company substantially achieved its objectives in 1998. Included among
the objectives that the Committee established for 1998 were (i) the continuing
evaluation and pursuit of attractive acquisition opportunities, (ii) achieving
the financial goals set forth in the 1998 budget approved by the Board, (iii)
increasing financial community and investor awareness concerning the Company's
securities and (iv) developing new areas of business. In recognition of the
successful achievement of such objectives and other major accomplishments during
1998, the Committee recommended and the Board approved the year-end cash bonuses
to the Company's executive officers as indicated in the Summary Compensation
Table. The Company's executive officers attended numerous conferences and met
with many potential investors, and the Company's coverage in the investment
banking community has significantly expanded. Furthermore, the Company has
substantially met its projected 1998 budget for new business
7
<PAGE>
sales. The Committee determined, based on the recommendation of the consultants
as discussed above, to increase annual bonus opportunities to provide a
meaningful incentive that brings total cash compensation opportunities to
competitive 75th percentile rates of pay. Accordingly, the 1998 targeted bonuses
for each of the executives were set in line with this objective. These increases
are reflected in the Summary Compensation Table.
The Committee in February 1997 also established an annual incentive cash
compensation plan for executive officers that created the potential for
significant incentive bonuses if the Company achieved certain cash flow levels.
The television broadcasting industry generally recognizes operating cash flow or
"OCF" (operating income before income taxes and interest expenses, plus
depreciation and amortization and non-cash compensation, less payments for
program license liabilities) as a means of valuing companies. Accordingly, the
Committee believed it to be in the best interests of the stockholders to
establish an incentive for executive officers to achieve the highest possible
OCF. Under the incentive cash compensation plan, if the Company met or exceeded
its OCF targets for 1998, a bonus pool was to be created based upon a
predetermined rising scale percentage of the excess OCF. The allocation of the
bonus pool among the executive officers was to be determined at the discretion
of the Board. Based upon the consultants' recommendation, total annual
compensation opportunities for each executive position are set approximately
halfway between the median and the competitive 75th percentile levels. To
accomplish this, the consultants recommended that the plan be more formally
structured and contain a smaller discretionary element, while retaining the
approach that the performance focus remain tied to OCF growth and improvement
based upon specifically budgeted OCF targets. Based upon the consultant's
recommendation, stock options under the Company's 1995 Stock Option Plan were
granted as long-term incentive compensation to the Company's executive officers,
with each executive officer receiving options having a value based upon a
percentage of base salary, as discussed above. The value placed upon the
options was determined in accordance with a Black-Scholes American option
valuation formula.
As one of the Company's largest stockholders, Vincent Young's financial well-
being is directly tied to the overall performance of the Company as reflected in
the price per share of common stock. For his services as the Company's chief
executive officer, Vincent Young's compensation is and will continue to be
determined in accordance with the compensation policies outlined herein. Based
on the recommendation of the consultants, the Company entered into employment
agreements with Vincent Young, Ronald Kwasnick, James Morgan and Deborah
McDermott the terms of which are described under "Employment Agreements."
The Committee's annual performance evaluation of each executive officer is
subjective, will rely heavily on the performance evaluation presented to the
Committee by the Company's Chairman, and will not typically be based upon an
exact formula for determining the relative importance of each of the factors
considered, nor will there be a precise measure of how each of the individual
factors relates to the Committee's recommendation with respect to each executive
officer's ultimate annual compensation.
Section 162(m) of the Internal Revenue Code limits deductions for certain
executive compensation in excess of $1 million. Certain types of compensation
in excess of $1 million are deductible only if (i) performance goals are
specified in detail by a compensation committee comprised solely of two or more
outside directors, (ii) payments are approved by a majority vote of the
stockholders prior to payment of such compensation, (iii) the material terms of
the compensation are disclosed to the stockholders, and (iv) the compensation
committee certifies that the performance goals were in fact satisfied. During
1998, the Committee considered the compensation arrangements of the Company's
executive officers in light of the requirements of Section 162(m).
8
<PAGE>
While the Committee will continue to give due consideration to the
deductibility of compensation payments on future compensation arrangements with
the Company's executive officers, the Committee will make its compensation
decisions based upon an overall determination of what it believes to be in the
best interests of the Company and its stockholders, and deductibility will be
only one among a number of factors used by the Committee in making its
compensation decisions. Accordingly, the Company may enter into compensation
arrangements in the future under which payments are not deductible under Section
162(m).
Compensation Committee of the Board of Directors
Alfred J. Hickey, Jr., Chairman
Leif Lomo
David C. Lee
Vincent J. Young
9
<PAGE>
Performance Graph
The following line graph compares the yearly percentage change in the
cumulative total stockholder return on the Company's Class A Common Stock with
the cumulative total return of the Nasdaq Stock Market Index and the cumulative
total return of the Nasdaq Telecommunications Stock Market Index (an index
containing performance data of radio, telephone, telegraph, television and cable
television companies) from November 7, 1994, the effective date of the Company's
initial public offering, through December 31, 1998. The performance graph
assumes that an investment of $100 was made in the Class A Common Stock and in
each Index on November 7, 1994, and that all dividends were reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURNS
Value of $100 Invested on November 7, 1994
------------------------------------------
[Graph]
<TABLE>
11/7/94 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
-------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Young Broadcasting Inc. $ 100 $ 93 $ 149 $ 154 $ 204 $ 220
Nasdaq Stock Market 100 99 140 172 211 297
Index
Nasdaq 100 94 123 126 185 305
Telecommunications
Stock Market Index
</TABLE>
The Company believes that the foregoing information provided has only limited
relevance to an understanding of the Company's compensation policies during the
indicated periods and does not reflect all matters appropriately considered in
developing its compensation strategy. In addition, the stock price performance
shown on the graph is not necessarily indicative of future price performance.
10
<PAGE>
The following table summarizes the compensation for services rendered to the
Company paid in 1996, 1997 and 1998 to the Chief Executive Officer and the
Company's other executive officers.
<TABLE>
<CAPTION>
Summary Compensation Table
------------------------------------------------------
Long-Term
Compensation
Annual Compensation Awards
------------------------------------------------------ -------------------
Securities
Other Annual Underlying All Other
Name and Salary Bonus Compensation Options Compensation
Principal Position Year ($) ($) ($)(1) (#) ($)(2)
- --------------------- ------- -------------- --------------- ---------------- ------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Vincent J. Young 1998 862,500 796,094 259,789 109,595 5,000
Chairman (CEO) 1997 862,500 797,057 275,276 96,435 4,750
1996 750,000 290,000 278,044 202,740 4,500
- -------------------------------------------------------------------------------------------------------------------------
Adam Young 1998 265,000 122,299 -- -- --
Treasurer 1997 265,000 122,446 -- 1,004 --
1996 230,000 67,500 -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Ronald J. Kwasnick 1998 442,750 286,063 54,826 17,426 2,400
President 1997 442,750 286,409 58,092 21,575 2,400
1996 385,000 135,000 58,797 16,242 4,500
- -------------------------------------------------------------------------------------------------------------------------
James A. Morgan 1998 370,875 239,625 51,601 13,376 5,000
Executive Vice 1997 370,875 239,914 54,675 15,835 4,750
President 1996 322,500 106,000 54,971 13,992 4,500
- -------------------------------------------------------------------------------------------------------------------------
Deborah A. McDermott 1998 316,250 204,331 28,366 2,838 5,000
Executive Vice 1997 316,250 175,352 30,056 4,608 4,750
President-Operations 1996 248,333 90,000 30,294 13,992 4,500
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
______________________
(1) Reflects the forgiveness of loans which were made to employees in 1994 and
1995 for the purpose of satisfying their federal income tax withholding
requirements related to non-cash compensation paid in the form of shares of
Common Stock. See "Certain Transactions."
(2) Reflects employer contributions to the Company's 401(k) Plan on behalf of
the named executive officers. For 1996, 1997 and 1998 such contributions
were made in the form of shares of Class A Common Stock valued at fair
market value on the date of issuance.
11
<PAGE>
The following table sets forth information concerning individual grants of
stock options made during 1998 to the named executive officers in the Summary
Compensation Table.
<TABLE>
<CAPTION>
Option Grants In Last Fiscal Year
Individual Grants
- -----------------------------------------------------------------------------------------
Potential Realizable Value
Number of Percent of at Assumed Annual Rates
Securities Total Options Exercise of Stock Price Appreciation
Underlying Granted to of Base for Option Term(3)
Options Employees in Price Expiration -------------------------------
Names Granted(1) Fiscal Year Per Share(2) Date 5%($) 10%($)
- ----------------------- ------------ -------------- ------------- ------------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
Vincent J. Young 109,595 21.672% $24.50 10/13/08 741,837 1,639,267
20,405 4.035 26.95(4) 10/13/03 151,931 335,728
- ------------------------------------------------------------------------------------------------------------------------
Adam Young 12,000 2.373 24.50 10/13/08 81,227 179,490
- ------------------------------------------------------------------------------------------------------------------------
Ronald J. Kwasnick 37,500 7.415 24.50 10/13/08 253,834 560,906
- ------------------------------------------------------------------------------------------------------------------------
James A. Morgan 33,000 6.526 24.50 10/13/08 223,374 493,597
- ------------------------------------------------------------------------------------------------------------------------
Deborah A. McDermott 20,000 3.955 24.50 10/13/08 135,378 299,150
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
______________________
(1) Options may be exercised immediately with respect to 10% of the total option
shares indicated for each of the named executive officers. The following
fixed percentages of such option shares will become exercisable on October
13, 1999 and on each of the three anniversaries of such date, in cumulative
fashion: 15%, 20%, 25% and 30%, respectively.
(2) The exercise price was established at the market price on the date of grant,
October 13, 1998.
(3) The assumed annual rates of appreciation of 5% and 10% would result in the
price of the Company's Class A Common Stock increasing to $39.91 and $63.55
respectively. For the period from November 7, 1994, the effective date of
the Company's initial public offering, through December 31, 1998, the
cumulative total return of the Company's Class A Common Stock has increased
120%.
(4) The exercise price was established at 110% of the market price on the date
of grant, as this option is an "incentive" stock option and Mr. Young
possesses more than 10% of the total voting power of the Company's Common
Stock.
12
<PAGE>
The following table sets forth information at fiscal year-end 1998 concerning
stock options held by the named executive officers in the Summary Compensation
Table. No options held by such individuals were exercised during 1998.
<TABLE>
<CAPTION>
Fiscal Year-End Option Values
- --------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options At Fiscal Year-End At Fiscal Year-End
------------------------------------- -----------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---------------------- ----------------- ------------------ ----------------- ----------------
<S> <C> <C> <C> <C>
Vincent J. Young 405,357 320,118 $7,278,041 $3,747,902
- --------------------------------------------------------------------------------------------------
Adam Young 4,164 19,691 37,523 237,662
- --------------------------------------------------------------------------------------------------
Ronald J. Kwasnick 59,217 78,148 985,596 934,458
- --------------------------------------------------------------------------------------------------
James A. Morgan 181,332 68,418 3,725,580 824,576
- --------------------------------------------------------------------------------------------------
Deborah A. McDermott 41,795 47,382 695,847 568,774
- --------------------------------------------------------------------------------------------------
</TABLE>
Those directors who are not also employees of the Company receive an annual
retainer as fixed by the Board, which may be in the form of cash or stock
options, or a combination of both. For the twelve months beginning October 1,
1997, nonemployee directors received an annual retainer in the form of 2,800
shares of Class A Common Stock. For the twelve months beginning on October 1,
1998, nonemployee directors received an annual retainer in the form of 3,500
shares of Class A Common Stock. Nonemployee directors receive reimbursement of
out-of-pocket expenses incurred for each Board or committee meeting attended.
Nonemployee directors also receive, upon becoming a director, a five-year option
to purchase up to 1,000 shares of Class A Common Stock at an exercise price
equal to 120% of the quoted price on the date of grant. No other directors are
compensated for services as a director.
Employment Agreements
The Company has employment agreements with Vincent Young (Chairman), Ronald
Kwasnick ( President), James Morgan (Executive Vice President and Chief
Financial Officer) and Deborah McDermott (Executive Vice President-Operations).
Each agreement is for an initial term ending on March 31, 2001, with automatic
three-year renewal terms commencing upon the expiration of such term. The
agreements each provide for an initial annual salary for each employee, with
automatic annual increases of 5% (subject to additional increases at the
discretion of the Board) and for participation in the bonus and incentive plans
of the Company and for other employee benefits as are generally available to
other senior management employees of the Company.
Each agreement provides that either the Company or the employee may terminate
the agreement on notice given before the expiration of the initial term or any
renewal term, and upon such termination the Company shall pay the employee all
amounts due for the current term plus a payment of one month of the employee's
base salary for each year of service with the Company. Upon a change of control
of the Company: (i) if the Company ceases to use the employee's services, he
shall be paid for the remainder of the term of his current employment agreement
plus a bonus equal to the greater of the amount he would have earned under the
Company's bonus plan for the year in which the change of control occurs or the
amount earned under the Company's bonus plan during the year preceding the
change of control; or (ii) in the event the employee continues to perform
services, the Company shall pay his base salary plus an annual bonus equal to
the greater of the bonus he would have earned under the Company's bonus plan for
the year or the bonus earned under any new incentive plan adopted by the
Company; or (iii) if the Company exercises its right to terminate the agreement
at the end of the then current term, the employee shall receive severance
benefits equal to one month of the employee's then current annual base salary
for each year of service. Upon a change of control, the employee shall become
13
<PAGE>
immediately entitled to exercise any outstanding options under the Young
Broadcasting Inc. 1995 Stock Option Plan. Each agreement subjects the employee
to a non-competition covenant in favor of the Company.
401(k) Plan
The Company maintains a retirement plan (the "401(k) Plan") established in
conformity with Section 401(k) of the Internal Revenue Code of 1986, as amended
(the "Code"), covering all of the eligible employees of the Company. Pursuant
to the 401(k) Plan, employees may elect to defer up to 15% of their current pre-
tax compensation and have the amount of such deferral contributed to the 401(k)
Plan. The maximum elective deferral contribution was $10,000 in 1998, subject
to adjustment for cost-of-living in subsequent years. Certain highly
compensated employees may be subject to a lesser limit on their maximum elective
deferral contribution. The 401(k) Plan permits, but does not require, matching
contributions and non-matching (profit sharing) contributions to be made by the
Company up to a maximum dollar amount or maximum percentage of participant
contributions, as determined annually by the Company. Effective January 1,
1997, the 401(k) Plan was amended to offer a match to employee contributions
equal to .5% for each 1% of compensation an employee contributes, up to a
maximum 3% Company contribution. Such contributions will be made in the form of
Class A Common Stock to be contributed by the Company to the 401(k) after each
calendar quarter with respect to such quarter based upon the closing price as of
the last day of such quarter. The Company contributed an aggregate of 25,243
shares of Class A Common Stock to the 401(k) Plan in 1998 in respect of matching
grants. The 401(k) applies a seven-year vesting schedule to all shares
contributed based upon the number of years employed by the Company. The 401(k)
Plan is qualified under Section 401 of the Code so that contributions by
employees and employer, if any, to the 401(k) Plan, and income earned on plan
contributions, are not taxable to employees until withdrawn from the 401(k)
Plan, and so that contributions by the Company, if any, will be deductible by
the Company when made.
Compensation Committee Interlocks and Insider Participation
Currently, the members of the compensation committee are Alfred Hickey, Leif
Lomo, David Lee and Vincent Young, the Company's Chairman.
CERTAIN TRANSACTIONS
The Company made loans in 1994 to certain executive officers and other
employees of the Company to satisfy their federal income tax withholding
requirements related to non-cash compensation paid in the form of shares of
Common Stock. The Company made additional loans to such employees in 1995 to
satisfy their remaining tax obligations related to such non-cash compensation.
The shares were issued to such employees in August and November 1994 pursuant to
the Company's terminated Incentive Stock Grant Program (the "Program") and in
March 1994 as part of compensation under employment arrangements. The aggregate
outstanding principal amount of such loans at March 16, 1999 was $673,000
including $367,000 to Vincent Young, Chairman and a director of the Company;
$77,000 to Ronald J. Kwasnick, President and a director of the Company; $67,000
to James A Morgan, Executive Vice President and a director of the Company; and
$37,000 to Deborah McDermott, Executive Vice President-Operations of the
Company. The loans bear interest at the rate of 7.21% per annum and are payable
in five equal annual installments of principal and accrued interest. On November
8, 1995, the Board of Directors of the Company adopted a loan forgiveness policy
in order to afford employees who received grants under the Program with the
benefits intended by the Program without imposing upon them the adverse tax
consequences incident thereto. Under the forgiveness policy, all employees of
the Company with such loans outstanding who were employed in good standing as of
November 15, 1995 could elect to defer for one year the first installment of
principal and related accrued interest. For all of such electing employees, one-
twelfth of such deferred installment was forgiven as of the end of each full
month of employment in good standing during the twelve-month period ended
November 15, 1996. This policy provides for employee elections similarly to
defer the remaining installments as they become due with similar monthly vesting
for forgiveness based upon continued employment in good standing.
14
<PAGE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, with the concurrence of the Audit Committee, has
selected Ernst & Young LLP as its independent auditors for 1999. Although
stockholder ratification of the Board of Directors' action in this respect is
not required, the Board of Directors considers it desirable for stockholders to
pass upon such appointment. If the stockholders do not ratify the appointment
of Ernst & Young LLP, the engagement of independent auditors will be reevaluated
by the Board of Directors.
A representative of Ernst & Young LLP is expected to attend the meeting and
will be available to respond to appropriate questions from stockholders.
The Board of Directors recommends a vote FOR ratification of the appointment
of Ernst & Young LLP.
APPROVAL OF AMENDMENT TO 1995 STOCK OPTION PLAN
The Board of Directors of the Company has adopted, subject to stockholder
approval, an amendment to the Young Broadcasting Inc. 1995 Stock Option Plan
(the "Plan") increasing the total number of shares with respect to which options
and stock appreciation rights ("SARs") may be granted under the Plan from
1,500,000 to 2,300,000. The purpose of the Plan is to promote the interests of
the Company and its stockholders by strengthening the Company's ability to
attract and retain competent employees, to make service on the Board of
Directors of the Company more attractive to present and prospective non-employee
directors and to provide a means to encourage stock ownership and proprietary
interest in the Company by officers, non-employee directors and valued employees
and other individuals upon whose judgment, initiative and efforts the financial
growth of the Company largely depend.
The Plan may be administered by either the entire Board of Directors of the
Company or a committee consisting of two or more members of the Board of
Directors, each of whom is a "non-employee director." The Plan is currently,
and has been since its adoption in February 1995, administered by a Stock Option
Committee of the Board of Directors consisting of two "non-employee directors."
The current members of the Stock Option Committee are Leif Lomo and Alfred
Hickey. To qualify as a non-employee director, a director may not be eligible
for grants under the Plan, but may receive options in respect of annual non-
employee director retainer fees.
Incentive stock options ("ISOs") may be granted only to officers and key
employees of the Company and its subsidiaries. Nonqualified stock options and
SARs may be granted to such officers and employees as well as to agents and
directors of and consultants to the Company, whether or not otherwise employees
of the Company. In determining the eligibility of an individual for grants
under the Plan, as well as in determining the number of shares to be optioned to
any individual, the Stock Option Committee takes into account the
recommendations of the Company's Chairman, Vincent Young, the position and
responsibilities of the individual being considered, the nature and value to the
Company or its subsidiaries of his or her service or accomplishments, his or her
present or potential contribution to the success of the Company or its
subsidiaries, the number and terms of options and SARs already held by an
individual and such other factors as the Stock Option Committee may deem
relevant. In making recommendations to the Stock Option Committee, the Chairman
focuses upon individuals who would be motivated by a direct economic stake in
the equity of the Company. Such individuals are primarily in the executive
management group and in the individual station management groups, and are
evaluated by the Chairman at each grant date based upon the factors discussed
above.
Options may provide for their exercise into shares of any class of the
Company's Common Stock, Class A, Class B or Class C. Each such class of Common
Stock has substantially identical rights, except with respect to voting. The
Class A Common Stock entitles its holders to one vote per share on all matters
submitted to a vote of the holders of Common Stock. The Class B Common Stock
entitles its holders to ten votes per share, except in connection with certain
significant transactions. Holders of Class C Common Stock, none of which is
presently outstanding, would not be entitled to vote, except as required by law.
All classes of Common Stock entitled to vote on any matter vote together as a
single class, except as otherwise required by law. Shares of Class B Common
Stock may only be held, directly or
15
<PAGE>
indirectly, by members of management and certain family members of management.
Accordingly, options exercisable for shares of Class B Common Stock may only be
granted to individuals within such group.
The Plan provides for the granting of ISOs to purchase the Company's Common
Stock at not less than the fair market value on the date of the option grant and
the granting of nonqualified options and SARs with any exercise price. SARs
granted in tandem with an option have the same exercise price as the related
option. As of April 2, 1999, options for an aggregate of 1,422,478 shares had
been granted to various individuals, including Vincent Young, Ronald Kwasnick,
James Morgan and Deborah McDermott. As of such date, options for an additional
396,000 shares had been granted subject to stockholder approval. The Plan
contains certain limitations applicable only to ISOs granted thereunder. To the
extent that the aggregate fair market value, as of the date of grant, of the
shares to which ISOs become exercisable for the first time by an optionee during
the calendar year exceeds $100,000, the option will be treated as a nonqualified
option. In addition, if an optionee owns more than 10% of the total voting
power of all classes of the Company's stock at the time the individual is
granted an ISO, the option price per share cannot be less than 110% of the fair
market value per share and the term of the ISO cannot exceed five years. No
option or SAR may be granted under the Plan after February 5, 2005, and no
option or SAR may be outstanding for more than ten years after its grant.
Upon the exercise of an option, the holder must make payment of the full
exercise price. Such payment may be made in cash, check or, under certain
circumstances, in shares of any class of the Company's Common Stock, or any
combination thereof. SARs, which give the holder the privilege of surrendering
such rights for the appreciation in the Common Stock between the time of the
grant and the surrender, may be settled, in the discretion of the Board or
committee, as the case may be, in cash, Common Stock, or in any combination
thereof. The exercise of an SAR granted in tandem with an option cancels the
option to which it relates with respect to the same number of shares as to which
the SAR was exercised. The exercise of an option cancels any related SAR with
respect to the same number of shares as to which the option was exercised.
Generally, options and SARs may be exercised while the recipient is performing
services for the Company and within three months after termination of such
services.
The Plan may be terminated at any time by the Board of Directors, which may
also amend the Plan, except that without stockholder approval, it may not
increase the number of shares subject to the Plan or change the class of persons
eligible to receive options under the Plan.
Federal Income Tax Consequences to the Company and the Participant.
Incentive Stock Options
- -----------------------
Options granted under the Plan which constitute ISOs will, in general, be
subject to the following Federal income tax treatment:
(i) The grant of an ISO will give rise to no Federal income tax
consequences to either the Company or the participant.
(ii) A participant's exercise of an ISO will result in no Federal income tax
consequences to the Company.
(iii) A participant's exercise of an ISO will not result in ordinary Federal
taxable income to the participant, but may result in the imposition of an
increase in the alternative minimum tax. If shares acquired upon exercise of an
ISO are not disposed of within the same taxable year the ISO is exercised, the
excess of the fair market value of the shares at the time the ISO is exercised
over the option price is included in the participant's computation of
alternative minimum taxable income.
(iv) If shares acquired upon the exercise of an ISO are disposed of within
two years of the date of the option grant, or within one year of the date of the
option exercise, the participant will realize ordinary Federal taxable income at
the time of the disposition to the extent that the fair market value of the
shares at the time of exercise exceeds the option price, but not in an amount
greater than the excess, if any, of the amount realized on the disposition over
the option price.
16
<PAGE>
Short-term or long-term capital gain will be realized by the participant at
the time of such a disposition to the extent that the amount of proceeds from
the sale exceeds the fair market value at the time of the exercise of the ISO.
Short-term or long-term capital loss will be realized by the participant at
the time of such a disposition to the extent that the option price exceeds the
amount of proceeds from the sale.
If a disposition is made as described in this section, the Company will be
entitled to a Federal income tax deduction in the taxable year in which the
disposition is made in an amount equal to the amount of ordinary Federal taxable
income realized by the participant.
If shares acquired upon the exercise of an ISO are disposed of after the
later of two years from the date of the option grant or one year from the date
of the option exercise, the participant will realize long-term capital gain or
loss in an amount equal to the difference between the amount realized by the
participant on the disposition and the participant's Federal income tax basis in
the shares, usually the option price. In such event, the Company will not be
entitled to any Federal income tax deduction with respect to the ISO.
Non-Qualified Stock Options
- ---------------------------
Non-qualified stock options ("NQSO"s) granted under the Plan will, in
general, be subject to the following Federal income tax treatment.
(i) The grant of a NQSO will give rise to no Federal income tax
consequences to either the Company or the participant.
(ii) The exercise of a NQSO will generally result in ordinary Federal
taxable income to the participant in an amount equal to the excess of the fair
market value of the shares at the time of exercise over the option price.
(iii) A deduction from Federal taxable income will be allowed to the Company
in an amount equal to the amount of ordinary income recognized by the
participant, provided the Company deducts and withholds all appropriate Federal
withholding tax.
(iv) Upon a subsequent disposition of shares, a participant will recognize a
short-term or long-term capital gain or loss equal to the difference between the
amount received and the tax basis of the shares, usually fair market value at
the time of exercise.
17
<PAGE>
NEW PLAN BENEFITS
Young Broadcasting Inc. 1995 Stock Option Plan
On October 13, 1998, the Stock Option Committee awarded options to purchase
an aggregate of 396,000 shares of the Company's Class B Common Stock to officers
and employees of the Company, subject to stockholder approval of the proposal to
amend the Plan. As of March 17, 1999, the market value of the Common Stock
underlying such options, based upon the closing price of $44.13 per share of the
Company's Class A Common Stock on such date, was $17,475,480. The options vest
as follows: 10% of the shares covered by the options may be purchased at any
time; an additional 15% of such shares may be purchased at any time after one
year from the date of grant; an additional 20% of such shares may be purchased
at any time after two years from the date of grant; an additional 25% of such
shares may be purchased at any time after three years from the date of grant;
and the remaining 30% of such shares may be purchased at any time after four
years from the date of grant. Each of the options is treated as an ISO with
respect to up to 4,081 of the option shares that may become exercisable during a
calendar year. The remaining options are treated as nonqualified options. Each
of the options has a ten year term other than with respect to the ISOs granted
to Vincent Young, which have five-year terms. The options were granted with an
exercise price of $24.50 per share, except for the ISOs granted to Vincent
Young, which have an exercise price of 26.95 per share. The following table sets
forth certain information relating to such awards to the named executive
officers and to the specified groups and persons.
Number of
Name and Position Options
- ------------------------------------------- ---------
Vincent J. Young 130,000
Chairman
Adam Young 12,000
Treasurer
Ronald J. Kwasnick 37,500
President
James A. Morgan 33,000
Executive Vice President
Deborah A. McDermott 20,000
Executive Vice President-Operations
Executive Group 232,500
Non-Executive -0-
Director Group
Non-Executive Officer 163,500
Employee Group
Giving effect to approval of this proposal and the increase in the number of
shares available for grants under the Plan, there would be 481,522 additional
shares available for future grants under the Plan. No determinations have been
made regarding the persons to whom grants will be made in the future under the
Plan or the terms of such grants.
The Board of Directors recommends a vote FOR approval of the amendment to the
1995 Stock Option Plan.
18
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and persons who own beneficially more than 10% of the
Company's Common Stock to file reports of ownership and changes in ownership of
such Common Stock with the Securities and Exchange Commission, and to file
copies of such reports with the Company. Based solely upon a review of the
copies of such reports filed with the Company, the Company believes that during
1998 such reporting persons complied with the filing requirements of said
Section 16(a).
ANNUAL REPORT
The Company's 1998 Annual Report is being mailed to stockholders together
with this proxy statement. No part of such Annual Report shall be regarded as
proxy-soliciting material or as a communication by means of which any
solicitation is being or is to be made. The Company will provide without charge
to each of its stockholders, upon the written request of any such stockholders,
a copy of its Annual Report on Form 10-K for the year ended December 31, 1998,
exclusive of exhibits. Written requests for such Form 10-K should be sent to
James A. Morgan, Secretary, Young Broadcasting Inc., 599 Lexington Avenue, New
York, New York 10022.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
meeting. However, if other matters should come before the meeting, it is the
intention of each person named in the proxy to vote such proxy in accordance
with his judgment on such matters.
2000 STOCKHOLDER PROPOSALS
Stockholders are entitled to submit proposals on matters appropriate for
stockholder action consistent with regulations of the Securities and Exchange
Commission. In order for stockholder proposals for the 2000 Annual Meeting of
Stockholders to be eligible for inclusion in the Company's proxy statement, they
must be received by the Secretary of the Company at the Company's principal
executive offices not later than December 8, 1999.
By Order of the Board of Directors,
/s/ James A. Morgan
JAMES A. MORGAN
Secretary
April 7, 1999
19
<PAGE>
YOUNG BROADCASTING INC.
ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Vincent J. Young and James A. Morgan
as proxies, each with the power of substitution, and hereby authorizes them to
vote all shares of Class A and Class B Common Stock of the undersigned at the
1999 Annual Meeting of the Company, to be held at the offices of WKRN-TV, 441
Murfreesboro Road, Nashville, Tennessee, at 10:00 a.m. on Tuesday, May 4, 1999,
and at any adjournments or postponements thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS
PROXY WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS AND "FOR" THE PROPOSALS SET
FORTH ON THE REVERSE SIDE.
------------------------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE SIDE
------------------------
Please mark
vote as in
this example
The Board of Directors recommends a vote FOR proposals 1, 2, and 3.
1. Election of Directors.
Nominees: Vincent J. Young, Adam Young, Ronald J. Kwasnick, James A. Morgan,
Bernard F. Curry, Alfred J. Hickey, Jr., David C. Lee, Leif Lomo, Robert L.
Winikoff
FOR WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
- --------------------------------------------------------------------------------
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. Selection of Independent Auditors.
3. Approval of amendment to the Company's 1995 Stock Option Plan to increase the
total number of shares with respect to which options and stock appreciation
rights may be granted thereunder.
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
Signature:_______________ Date:_______ Signature:_________________ Date:_______
